Form 1098-C: Contributions of Motor Vehicles, Boats, and Airplanes

IRS Form 1098-C, titled "Contributions of Motor Vehicles, Boats, and Airplanes," is both an information return filed with the IRS and a contemporaneous written acknowledgment for the donor.

The form reports:

• Box 1: Date of contribution
• Box 2a-c: Odometer mileage, year, make, and model
• Box 3: Vehicle or other identification number
• Box 4a-c: Vehicle sold and certification about sale conditions
• Box 5a-c: Material improvements made before sale
• Box 6a-c: Significant intervening use by charity
• Box 7: Vehicle transferred to needy individual at below FMV

Donee organizations must file Form 1098-C when:

• They receive a contribution of a qualified vehicle
• The donor's claimed value of the vehicle exceeds $500

Qualified vehicles include:

• Motor vehicles manufactured primarily for use on public streets, roads, and highways
• Boats
• Airplanes

Note: The form is not required for vehicles valued at $500 or less, though a written acknowledgment is still required for donations over $250.

The donor's charitable deduction depends on how the charity uses the vehicle. This is why Form 1098-C is critical for proper reporting.

Scenario 1: Charity Sells the Vehicle Without Material Improvement

• If the charity sells the vehicle without significant intervening use or material improvement
• The donor's deduction is limited to the gross proceeds from the sale
• Box 4a reports the gross proceeds amount

Scenario 2: Charity Uses or Improves the Vehicle

• If the charity significantly uses the vehicle for its exempt purposes (Box 6)
• Or makes material improvements to the vehicle (Box 5)
• The donor may deduct the vehicle's fair market value at the time of donation

Scenario 3: Charity Transfers to Needy Individual

• If the charity transfers the vehicle to a needy individual at below fair market value (Box 7)
• The donor may deduct the vehicle's fair market value

The $500 threshold triggers specific requirements for both the donor and the charity.

For vehicles with claimed value over $500:

• Charity must provide Form 1098-C as the contemporaneous written acknowledgment
• Donor must attach Copy B of Form 1098-C to their tax return
• Donor must file Form 8283 (Noncash Charitable Contributions)

For vehicles with claimed value over $5,000:

• Donor generally needs a qualified appraisal if claiming fair market value
• Exception: Appraisal not required if deduction is limited to gross proceeds from sale

The timing for providing Form 1098-C to the donor differs from typical information return deadlines:

The charity certifies its intended use on the form at the time of the contribution. If plans change, the charity may need to provide an updated form.

While the donor copy has special timing requirements, IRS filing follows standard deadlines:

For complete deadline information, see our Form 1098-C Filing Deadlines.

Charities must make specific certifications on Form 1098-C depending on how they handle the vehicle:

If selling without material improvement (Box 4):

• The vehicle was sold in an arm's length transaction
• The sale was to an unrelated party
• The gross proceeds from the sale

If making material improvements (Box 5):

• The intended material improvement
• The intended duration of the improvement

If for significant intervening use (Box 6):

• The intended use and duration of use
• That the use is in furtherance of the charity's exempt purpose

If transferring to needy individual (Box 7):

• The vehicle will be transferred to a needy individual
• The transfer will be at a price below fair market value
• The transfer is in furtherance of the charity's exempt purpose

Third-party vehicle donation programs:

Many charities use third-party companies to handle vehicle donations. The charity remains responsible for providing Form 1098-C, even if a third party processes the donation.

Determining fair market value:

When FMV deduction is allowed, donors should use reliable guides (Kelley Blue Book, NADA Guides) considering the vehicle's condition, mileage, and options. Be conservative in valuations.

Incomplete donations:

A vehicle donation is not complete until the charity receives all necessary documentation, including a properly signed title. Donors should retain proof of delivery.